Thoughts on Radio’s Digital Future
Technological Innovation in Radio: It’s the Device, Stupid!
To its detriment, radio just hasn’t done technology, but it looks like that is changing. And it’s not too late.
As much as I love the radio industry and its long-term business fundamentals (despite the current carnage), I believe one criticism can be fairly leveled: radio, for most of the last 40 years, has not embraced technological innovation. As entire industries were completely remade and strong new competition created utilizing the massive technological advances we have all lived through, AM/FM has largely sat it out.
Oh sure, broadcasters have adopted plenty of operational or back-office upgrades like content storage, voice tracking and studio automation and transmission and trafficking equipment are getting better and better. And, of course, the internet and e-mail play a critical role in communications and operations. But to the fundamental questions of what radio listeners experience, how stations generate revenue or what they are selling to advertisers, it’s hard to point to any significant technical advances since the advent of FM decades ago.
There are lots of negative examples here. RBDS, the technology that could have been showing listeners song and artist info. (which they really want) for the last 30 years sat unused because stations wouldn’t invest in a $3,000 box. Internet-streaming and consumer-facing station Web sites were ignored for years, so radio is now playing catch-up. [A few years ago, I was in the audience when a major group head told his troops that it was a waste of time to develop an internet strategy.] And while I won’t enter the vibrant debate, it’s fair to say that, until very recently, the radio ratings system has not kept pace with technology.
At great risk of biting the hand that partially feeds me, I’d also observe that AM/FM is the last of all media to upgrade to a digital infrastructure, and began that transition at the last possible instant. This has made the upgrade to HD Radio technology more challenging than it would have been if we had gotten really started, say, five years earlier.
Happily, at least from where I sit, radio has enthusiastically taken up the tech mantle in recent years, and I don’t think it’s too late.
RBDS use is widespread and all research indicates that listeners love it. As I discussed in a recent column, broadcasters have now jumped into the online world with both feet and are making great progress and generating revenue. While we at iBiquity always want more (station conversions, quality HD2 programming, promotion, more, more, more!), broadcasters have aggressively driven the HD Radio conversion forward in recent years. It seems that radio is on an unstoppable march to better measurement systems.
All these efforts and more to come are needed to revitalize radio, especially in these very tough times. We simply must try new things, not all of which will succeed, to engage and serve audiences and advertisers and develop new revenue opportunities. As the man said, the definition of insanity is doing the same things again and again and expecting different results.
One of the most important technical areas to focus on is one the industry has historically ignored completely: the device. I mean the radio receiver, something the industry has taken for granted at least since FM became widespread. Think of it, radio broadcasters have spent essentially no time or effort for the past 40 years influencing the design, features, pricing, distribution or promotion of the devices by which every one of their listeners accesses their product. Contrast that with a wireless carrier, which drives almost every aspect of mobile phone design and sales. They do that to ensure the right end user experience and to roll out new revenue producing services in a seamless and timely manner.
That radio (and TV) broadcasters have been hands off on receivers is understandable. There were well developed standards, manufactures were plentiful, retail availability widespread, and competition yielded good results, but the events of recent years make this hands-off policy dangerous for radio’s future. We track receiver sales very closely and have seen some very concerning trends.
First and foremost, AM/FM receiver unit volumes are way off. For at least a decade, more or less 100 million devices with AM/FM tuners in them were sold every year, 15-18 million or so in new cars, and 85 million in all other segments: home stereos, clock radios, aftermarket auto, boom boxes, etc. Well just a few years ago, we noticed something disconcerting, 100 million had become 80 million, almost overnight. Why? Competition in the form of MP3 players and cell phones came along and eliminated entire product categories. Transistor radios are but a quaint memory. AM/FM Walkmans: gone. Anyone seen anyone running in the park recently with those headphone radios that looked like ear muffs? Disappeared. Even table and clock radios, which are still sold in the millions of units, are way down in the last few years. People are waking up to iPods in docking stations.
This is obviously fairly concerning. If consumers buy fewer and fewer AM/FM receivers, over time there will be a lot fewer devices delivering the product, which has to mean less time spent listening. So we at iBiquity have had a simple mantra for the last few years: HD Radio technology (and analog AM/FM for that matter) must be in the devices people use. If radio is to remain the pervasive medium, we must be in iPod docks and the portable devices: cell phones, MP3 players, PDAs and, increasingly, personal navigation devices.
So I am cheered by efforts by many in the industry to get AM/FM, both analog and digital, on more devices. We at iBiquity have worked hand in hand with major broadcasters to directly influence manufacturers to include HD Radio technology and advanced digital applications, like traffic data. Broadcasters, visiting radio makers, in Japan, imagine that.
The NAB/RAB Radio 20/20 initiative has made AM/FM inclusion on MP3 players and cell phones a top priority, and Microsoft’s announcement that it will have an FM tuner (with ‘Buy from FM’ capability) in the next generation Zune is a big win. And for HD Radio technology, a new generation of lower power, lower cost chip solutions, from our partners Samsung and SiPort, have just been released. We are working hard to include digital radio in portable devices now that the chips will allow it, so stay tuned.
There are very compelling reasons for portable device manufacturers to add radio to their products. The basic audio is a proven consumer application. AM/FM has the potential to be the most economic method to deliver all sorts of data (like traffic, weather, advertisements, etc.) to mobile devices, saving more expensive network capacity for more profitable uses. Applications like ‘Buy from FM’ or iTunes Tagging can generate revenue for wireless carriers or digital music providers. Everyone can win with radio in portable devices.
Radio’s leaders have begun to focus not only on technology broadly, but also on the device specifically and are making great progress even though we were late to the party. I’d argue that the technical renaissance in radio is like nothing the industry has seen since the basic methods of AM and then FM were commercialized.
That’s great, because the industry needs it, and it’s not too late. Because of radio’s core strengths – ubiquitous use, fantastic spectrum, very compelling economics, AM/FM has a lot to offer and a ton to gain from its newfound embrace of technology.
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Thanks for reading, and let me know what you think: email to thoughts@ibiquity.com. I got a bunch of thought provoking comments on The Long Tail column, and the usual suspects questioning my sanity and family background. I do read, consider and try to respond to all of them.
All good things.
Bob Struble
Columbia, MD
November 2008
